RICHARD KING, HOST: Joining me now, who’ll be visiting our neck of the woods today, New South Wales Senator Tim Ayres, the recently appointed Industry Minister, who’s on the line. Good morning, Tim.
SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: G’day, Richard. Good to be on the show.
KING: And congratulations on the appointment. Well done, Industry Minister.
AYRES: Well, thank you. Thank you very much. I mean, I feel the sense of responsibility acutely. I’ve worked in manufacturing and the engineering industry my whole life and having an opportunity to be part of the rebuild of Australian industrial capability and Australian manufacturing is a very important opportunity and I take it very seriously.
KING: Well, a wonderful opportunity, these AUKUS submarines, but I gather there’s quite a few that are involved in shipbuilding and maybe potentially involved in building these submarines, particularly in South Australia. A bit concerned about this review that’s been ordered by the Trump administration, having a look at the AUKUS deal. Should manufacturers in Australia be worried about this, Tim?
AYRES: Well, we have to be very focused here and the opportunity for Australian industry in defence capability across the board, including AUKUS. AUKUS Pillar 1, nuclear-powered, conventionally armed submarines for Australia, this is the largest industrial undertaking in Australian history. It’s obviously very important for our defence, but it’s also important for local industry. And you’re right – whether it’s in South Australia or Newcastle, we have a proud history in Australia of building ships, building submarines.
Of course, there’s other areas of defence expenditure that we’re bringing home – missile manufacturing in the Hunter, turning out long-range missiles before the end of the year. We are very focused on absolutely securing Australia’s defence capabilities. In particular, making sure that we’re producing key lines of that effort here in the Hunter Valley. And you’ve got a local Hunter boy, Pat Conroy, as the Minister for Defence Industry, who’s absolutely focused on the opportunities for Australian manufacturing.
KING: All right. But should we be concerned about this review that’s been ordered by the Trump administration looking into AUKUS to make sure it aligns with their, you know, America First philosophy?
AYRES: Yeah, look, there’s been a lot of speculation about this announcement. I don’t think it’s come as a surprise to the government that an incoming administration, you know, a new administration, would review those arrangements. The United Kingdom conducted their own review. Australia, of course, has been – you know, you’ve got to constantly make sure that these arrangements are delivering on time, that they’re meeting milestones.
I’m not surprised that a review is undertaken. I’m very confident that the outcome of this process will be a strong affirmation of Pillar 1 and Pillar 2 of the AUKUS arrangements because they’re in the interests of all three countries – Australia, the United States and the United Kingdom. I’m confident about where that will land.
KING: All right, okay –
AYRES: But I understand speculation will go on –
KING: Yes.
AYRES: – because there’s very strong views either side of the debate about AUKUS. And people will see in it their own – you can see some of the participants in the public debate have got, you know, very strong views about this. I’m not surprised to see it kick off a bit of speculation.
KING: Well, plenty of that. Okay, you’re confident there. Are you confident about the survival of the Tomago aluminium smelter here in Newcastle? The Australian Financial Review put up a story about a week ago suggesting that because of the costs of electricity, I think their contract, their current contract, with AGL ends in 2028. They’re trying to organise a contract for the supply of electricity and I believe they are the single biggest user, well, certainly in New South Wales if not Australia. But they – they’re not happy about the price that’s been offered. And there’s some suggestions that it could be the end if they can’t secure a new energy deal. Are you confident about the future of Tomago Aluminium?
AYRES: Well, firstly, they are a world-class aluminium production facility and they’re Australia’s largest aluminium processing firm. They do use a lot of electricity – about 12 per cent of New South Wales’s output is used by the Tomago facility. And that means that, firstly, they’re an important production facility in Australia but, secondly, they play actually a very significant role in the New South Wales electricity system stabilising the grid. They can at peak times of electricity use across the rest of the grid they can scale up or scale down their production to absorb peak demand. That’s a not-well-understood role what the Tomago facility plays – not just a big consumer but a stabilising role in the grid.
It is absolutely normal for the company at the end of their power purchasing agreements to be engaging with the market to establish new power purchasing agreements. That has been a regular cycle. And it’s right for them to be trying to source the best deal for Tomago aluminium. As you know – and I think I’ve been on the program explaining before – the Albanese government has delivered a $2 billion aluminium production credit for Australia’s aluminium production facilities to make sure that we keep manufacturing onshore. I’m confident about the future of the facility, but I’m not complacent. And I’m going to keep absolutely engaged with the company and with the other players in this area because that’s – you know, that’s my job, is to engage with these companies and make sure that they’re on the right track.
KING: Tomago did say some years ago they were committed to, you know, converting to renewable electricity, and they’ve basically said, “Look, maybe that commitment within the next five or so years is going to be impossible.” Do you think it’s realistic for them to – you know, given that they’re the biggest energy users in the country I believe – certainly in New South Wales – converting to renewables? Do you think that’s a realistic goal?
AYRES: Well, they’re doing that for two reasons. The first is because they’re trying to source the cheapest form of electricity. So that is they’re moving to lower cost renewables and focused on their power purchasing agreements, achieving that objective because of the cost. Secondly, they’re doing it because that’s the market that they’re selling into, is demanding zero emissions or close to zero emissions electricity –
KING: Do you think people are worried about that, or are they just worried about the price, Tim, you know?
AYRES: Well, it’s not people who they’re selling to – it’s big industrial firms that are using their aluminium who are demanding that in the product. So it’s not in a sense that consumers who buy a can of Coke, you know, are passionate or not about the level of emissions embodied in that Coke can; it’s because big industrial users – whether it’s the car industry or packaging companies – are saying that’s what they want.
KING: Yeah, but surely they also want the cheapest available, too, you know.
AYRES: Yes, well –
KING: And they’re putting that in front of, you know, the emissions, you know? It’s the cost.
AYRES: Both. Both of those factors are absolutely driving their thinking. And in New South Wales and in Australia coal-fired electricity is the most expensive. That’s the point. There’s two issues driving the thinking, whether it’s Rio Tinto or Tomago, it is about cost and, secondly, it’s about the fact that the market that they are selling into is demanding, you know, zero emissions products. And they see that as their future. It’s not the government saying you must shift in this direction – it is the market saying that they’re going to shift in that direction. And we are determined to support their future production, which is why we’ve got this onshore aluminium production credit for green aluminium.
KING: Right.
AYRES: It supports their objectives. And they’re not doing it because, you know, they are – I mean, I’m sure they’ve got very good sustainability objectives. I’m sure – but they’re not doing it because they’re hippies, they’re doing it because it’s in their commercial interests.
KING: Yeah.
AYRES: And that does support our broader economic objectives, which is to get the Australian economy to more industrialisation, more manufacturing, and Australia’s competitive advantage there is to electrify as much of our manufacturing processes as possible and to shift to low-cost renewable power backed by gas, backed by storage, backed by hydro to make sure that we position our manufacturers in the best way for global markets.
KING: Yeah, all right. Well, good to talk to you. We haven’t spoken to you since you’ve been appointed the Industry Minister. Again, congratulations on that. And, look, you’re going to Tomago today. What are you hoping to do? Just have a look and see what’s going on there? Any announcements?
AYRES: Well, there won’t be any announcements today. It’s going to be a normal thing in the way that I approach all of these kinds of issues – to be there at these facilities, you know, listening carefully to what management and supervisors and staff and workers are saying, because I want the closest engagement possible with industry. I’m going to go to UGL Broadmeadow as well, because we’ve got ambitions here to keep working with the states and territories on local content in rail. I want to see more rail jobs in the Hunter and more rail jobs in Australia. And you can’t do that from a desk in Canberra.
KING: Yeah.
AYRES: My view is you role your sleeves up, you get out there have a listen to – have a listen to people, and it informs good decision-making and means that we’re close to manufacturing, close to blue-collar workers who work in those sectors and engineers who work in those sectors, because that’s how we’re going to – that’s how we’re going to make good sessions for a Future Made in Australia –
KING: All right.
AYRES:– and a stronger blue-collar engineering sector, particularly in the Hunter Valley, mate.
KING: All right.
AYRES: Because it’s just crucial, the Hunter Valley, for Australia’s energy future and for our industrial future.
KING: Good to talk you, Tim. And you enjoy the weekend. And, again, congratulations on your appointment as your Energy Minister – I beg your pardon, your Industry Minister.
AYRES: Thanks, Richard. Good on you, mate. See you soon.
KING: Have a great weekend.
ENDS.
